Compulsary Purchase -help Needed

Need2Save_3

This is going to be a long one -please bear with me!

I purchased a house as an investment opportunity last year. The house needed renovating and also has a sizable garden which can accomodate 2 plots. Have now finished the renovation of the house, but having a few difficulties with the land.

Started all the prelim work last year; all site surveys etc done. Looked into purchasing ajoining land to make site considerably larger. All going well, plans drawn up council and highways seemingly happy. Then an investor offered to buy our land for £70k and do the investment himself. We pondered and agreed to go in as sleeping partner; we were to get £70k then invest x ammount and he would do the work and we would get x % of profit.

Then the area was earmarked for regeneration and our land is showing as a building plot for the same number of houses, with a new access road (we were intending to tap into an existing road). Unsurprisingly, the investor went quiet.

We're now in a position where the plans for the area are not in a formal stage, but we have been told that we will not get consent as our plans would not conform to this plan. Nor would we be likely to be considered to develop the site (when the land is tendered) as we do not own the land the new road will be coming through, and the people who do own it will probably want to do ours too (they are a housing company).

If we put in a planning application and the Council refused on the grounds of the regeneration plans we could claim compensation. However, they are saying that they will find another reason for refusal (v. unfair, bearing in mind they were really positive before this regenration project began).

The Council are recomending we sell the house to the housing company at current market value, but this does not include plot value (which they will get for nothing) and the prices have slumped as a result of the regenration plan.

We were relying on this investment to fund the family whilst finishing further training and had the house not had this potential we would not have bought it. I know there will be many out there who will say that it wasn't a surefire thing anyway, but from a development perspective it couldn't have been a more certain bet (architects advice and Council advice pre-purchase indicating such).

Any help greatly appreciated and much needed!

GDB2222

You could look up a good textbook on compensation. My understanding is that you are entitled to the full value of your land, including its hope value for redevelopment. The key point is that this is calculated ignoring any diminution in value of the land as a result of the regeneration scheme. You are also entitled to a 10% disturbance allowance.

Need2Save_3

I'll confess...am a law student of 5+yrs and have all the relevant info but am still finding it hard to get my head around.

What you've said is true, but the prob is that I need to show that the land has this value at the time they aquire it (hope value). Thus, the offer which we lost would possibly be considered as too long ago by the time the CPO is issued. Also, they have said they will try to get around any hope value by refusing an application on grounds which cannot be directly attributed to the regenration project. Thus, the land would be worth no more than garden-land value. -v. sneaky as they initially said they'd be happy with the proposal.

Do you have any experience of how this works in practice GDB222?

I know from experience that how the law reads and how it is actually applied are often two very different entities! Also, I have been unable to find an example of practical application of the new Compulsary Purchase Act 2004, so I have nothing to go on apart from the wording of the Statute.

GDB2222

What you are saying sounds like maladministration on the part of the local authority. I suggest that you secretly tape some of these conversations. You can of course appeal any planning decisions.

For the valuation, you will need the help of a qualified surveyor. Yours costs are covered, up to a limited amount - known as Bride's scale (or something like that. I am hopeless on names.)

lush_walrus

No Im sorry but this is not maladministration on behalf of the council. Yu don't say how long you have had this plot, but if this development is advanced enough for an application to have been put forward by the developers who are planning to re-develop the whole plot, then it will have been ear marked as rejeneration area for a very long time, and something that should have come up in your searches prior to purchase of the land.

The process you need to go through now is to create a development that fits with the overall development plan for the area (presumably you will have seen the plans for the overall development) and argue your case that you should have the right to re-develop your plot, which is possible under the general masterplan that has been prepared by the developers architect.

You need to also enter into discussions with the developer, as soon as possible. Your architect may be able to do this if they have experience in this, if not then you will need to employ a planning supervisor (this is not a planner fron the council, but someone who has studied planning and works independantly advising people prior to planning applications).

Now the important thing to remember is that the council (who are supporting the developers applications and this is completely normal so do not go down the route of accusing them of anything), will want you to reach an agreement with the developer. If you do not agree with the developer from here onwards, then the council will at some stage need to step in, and compulsary purchase your land (and any property on it) from you to enable the masterplan to go ahead, and the area to be redeveloped. The council, obviously do not want to do this, as it costs them money, the ideal situation they want is for you to get to a point where you agree with the developer and the masterplan is guaranteed to go ahead without any of their funds. They will not be interested in any form of risk and if negotiations between yourself and the developer break down, then they will step in and compulsary purchase.

From your perspective you during discussions with both the council (via a planning supervisor or your architect if they are able to) and the developers to prove that 1. you are willing to fit with the developers masterplan, and 2. that you are willing and able to develop your own plot. You will need to prove that you are able to fund your part of the development, as the council will not be able to support anything that goes against the masterplan or anything that is a risk of not being developed.

Its up to you if you want to risk getting involved with this or just take the money, but you are playing with the big boys now and do not underestimate their powers and skills at negotiating. You must employ someone NOW if you are going to try to fight the developers and conform with the masterplan, any time you waste now, will be time that the council will be deciding whether or not to step in. This is definately not something to take on yourself on your own. So you need to weigh up the costs of employing someone who is capable to negotiate with the planners, pay an architect to produce drawings that prove you are trying to conform with the masterplan (including any density the masterplan is requiring) and the stress that this is going to be to go through. The risk is, that the developers will not play ball with you, and the council are forced to Compulsary purchase (and then you will be likely to gt even less money than you will from the developers)

I hope that helps if all of this is going on in London, I can put you in touch with someone who can help with this. Good luck

lush_walrus

GDB2222 wrote:

You could look up a good textbook on compensation. My understanding is that you are entitled to the full value of your land, including its hope value for redevelopment. The key point is that this is calculated ignoring any diminution in value of the land as a result of the regeneration scheme. You are also entitled to a 10% disturbance allowance.

Im not sure where you have taken this information from, but it is not true Im afraid. When these matters arise, and no planning permission has been granted, the worth of the land is all that is considered. There is absolutely NO POTENTIAL value of development if planning permission has not been granted, as the land is just land. The only other time that circumstances other than the land value is taken into account is when there is a flurishing business on the site. Then all relocation costs are taken into account including the costs of complying with any current legislation which is applicable when in a new building, but not compulsary in the existing.

I have come across exactly that on one of our projects, neighbour building was ear marked for compulsary purchase, but although the building itself was worth £500,000, the relocation costs which included the costs of complying with new discharge regulations in manufacturing came to £4million. The value of the land in this case was escalated to 4.5m, and negotiations are still going backwards and forwards with the developers, as ultimately the council will not want to CP something with a value like that attached. The fight has been for 5 years so far and still going on.

Need2Save_3

Sorry, but maybe I should clarify the situation slightly.

At the moment the regeneration project is in a consultation stage, which began aprox. 9mths ago (after we purchased & had done all the leg-work). It will be formalised in a years time and this is why it did not show up on searches.

It has been indicated that our land will not alter on the regeration plan once formalised.

Our proposal would be to have developed as a back-land development; which are currently plentyfold in our area, but the regeneration seeks to rid the area of (current planning policy does not say proposals can be refused on these grounds). Consequently, their proposal is to put a new road in to make it a 'normal' steet and in so soing demolish another back-land development.

The Council are saying that our proposal would not conform currently as it would be back-land development and would not fit with the regeration plan. As I understand it this would mean that they would be obliged to pay plot value. When I asked them this I was told that they would try to put other reasons for turning down the application, so as to avoid this situation.

I asked if we could do the development as per their plan (turn the houses around fronting onto the new road), as the number and size of houses was the same anyway. They said 'no' as we would need to aquire the land which the new road would be built on and the housing association would not sell it as they want to do the whole development themselves (the housing asscociation are a key player in the regenration project). They then advised that we sell the whole property to the housing association at current market value.

L-walrus: We have the money to do the development, so that is not an issue. It appears more along the lines of us having to submit a better proposal than the housing association to build on our OWN land, as they have the land access earmarked and will not sell we could not do this. Consequently, they will have a better proposal for our land as the Council can force us to sell (the Council have said that they would be highly unlikely to force the HA to sell to us as they have some form of partnership with them).

What seems unfair is that they had been very posisitive to our proposal when we consulted them informally, but now that the regeneration project has begun they have changed their tune.

We realise that its now a damage limitation exercise, but really need help re the best way foward. We have appointed a surveyor (£100 per hour) and solicitor (£150 per hour), but this is very expensive and will eat away at our profit.

Can you tell me a little more about the brides scale? Could we recover these fees?

From reading the legislation, we have 2 courses of action (on which I stand to be corrected!):

1. To argue that the land does have worth of £70k based on the offer we lost when the plans circulated. Therefore it should acheive £70k.

2. To put in an application (more expense) and contest any grounds for refusal which appear to be excuses. If this was successful, we would get plot value which would be more than 70k and possibly compensation for loss of opportunity.

Option 2 would have to be instigated prior to the regenration plans being formalised. This is why its crucial that we act soon. Our surveyor reccomends we put an application in now and fall back on option 1 if that proves unfruitful. The thing is that I don't know how CPO's etc. work in practice, and whether this would be wasted money re fees for the surveyor and planning application (we have our plans already drawn up as per Council and Highways advice last year), particularly if we contest ground for refusal, which seems inevitable on what the Council have said.

Sorry, have pob. made it even more complicated to you guys! Please keep the advice coming as I'm much in need of it!

lush_walrus

I can't imagine why you are possibly paying a surveyor such high hourly rate? Surveyors are generally not the right trade for this type of work, my advice would be to get rid of the surveyor and get in a planning supervisor, as this will be the best way to get good advice as to how to get the application through, or if your chances are so slim that its just not worth it and you are better off selling it on to another speculator.

This really is a very specialised and complicated process, the thing I can't understand from what you have said is why HA are having access to the site via a private road? Presumably this is there intention if they are in future going to deny you access even if you do manage to get planning.

The details for development guidlines will be in your local authority's UDP (to check if they have stipulated that back land development will not be encouraged), the fact that the planners haver previously been encouraging is neither here nor there Im afraid as the fact is policies change pretty often.

Really you need to employ the right people to fight this, have you seen the proposals for the masterplan?

Its hard to advise on this remotely, every case is very different and there really are no hard and fast rules. You need to get into discussions with HA and the local authority and the best way to do this is to employ a planning supervisor instead of the very expensive surveyor (and that is coming from an architect based in London!).

Need2Save_3

Might be a better move. We took on the surveyor on our solicitor's rec., but had our doubts especially as the fees are so high.

The land where the new road is to be built has Housing Association (HA) houses on it (a back-land devlopment), but they intend to demolish the 6 houses, replacing them with 3 bungalows and a new road servicing our current land and these bungalows.

Our proposal (at the moment) would have site access from a different road, which is council adopted and nothing to do with the HA.

The current regeneration plans (as per masterplan) have no back-land developments -they are all to be demolished. The local authorities guidance is that back-land developments are not currently prohibited -as per UDP.

What is the diff. between a planning supervisor and a surveyor? -apart from the cost!

The solicitor advised on the surveyor because he would be able to assess the market value of the land and help any claims based on this. Would a PS be able to do the same?

We have a relative who is our architect and has drawn up plans which fit the current regs, so would a PS help if we submit a proposal now as we have been told it will be contested and ultimately refused anyway?

Sorry if these seem like stupid Q's, but this isn't something I have any knowledge of!